During the extended holiday period, JP Morgan’s daily indicator of country risk for Argentina has escalated to 1,410 basis points. This is a sharp decline from the low of 1,148 basis points seen two months ago. The indicator measures the excess cost of Argentine debt compared to the yield of the United States Treasury. The recent fall in Argentine bonds, which have decreased between 0.3% and 0.5% in the current trading session, is contributing to this increase in country risk.
On the stock side, amid a day of declines in the Dow Jones, ADRs are all in the red. Banks are bearing the brunt of these losses, with Banco Galicia experiencing drops of up to 4%, followed by Supervielle with 3.9% and Macro and BBVA with 3.2%. These declines have interrupted any signs of recovery that had been shown by Argentine assets two weeks ago after the Senate approved the Base Law.
Investors are also growing increasingly concerned about the Central Bank’s ability to accumulate reserves effectively due to limited purchases in June and ongoing challenges in export supply and import payment demands. Despite this uncertainty, it is crucial for investors to monitor the evolving financial landscape in Argentina and assess its implications for their portfolios as they navigate through these challenging economic times.